The situation that results when a state buys more from abroad than it sells is known as a(n)
A)devaluation.
B)floating exchange rate.
C)managed exchange rate system.
D)balance-of-trade deficit.
E)inflation.

Question

Quizplus · Accepted Answer

A balance-of-trade deficit occurs when a state's imports exceed its exports, meaning that it is buying more from abroad than it is able to sell to other countries. This can lead to a variety of economic consequences, such as a devaluation of the state's currency or inflation, but the specific terminology for this situation is a balance-of-trade deficit.

The Situation That Results When a State Buys More from Abroad